Much of Asia's animation production since the 1960s has been tied to foreign interests attracted by stable and inexpensive labour supplies. For nearly forty years, western studios have established and maintained production facilities, first in Japan, then in South Korea and Taiwan, and now also in the Philippines, Malaysia, Singapore, Vietnam, Thailand, India, Indonesia, and China. The economics of the industry made it feasible for Asia to feed the cartoon world, to the extent that today, about 90% of all American television animation is produced in Asia. The usual procedure is for pre-production (preparing the script, storyboard, and exposure sheets) to be done in the United States or other headquarter countries, after which, the package is sent to Asia for production (drawing cels, colouring by hand, inking, painting, and camera work). The work is sent back to the U.S. or other headquarter country for post-production (film editing, colour timing, and sound). Asian animation companies bid fiercely for part of the global business, insisting that it provides employment and skills for young people, brings in needed foreign capital, and adds to the creation or enhancement of domestic animation. Offshore animation has led to the creating and nurturing of a local industry, as an infrastructure is built up, equipment is put into place, and skills are transferred.

CURRENT STATE OF INDIAN ANIMATION INDUSTRY

There is a considerable increase in the 2D and 3D animation outsourcing to India. Due to the extremely competitive climate as well as the global slow-down, some of the large studios in the US have implemented large amounts of layoffs of animators and artists. India is slowly emerging as an alternative to Korea, Philippine and Taipei for animation outsourcing. India is also emerging as a post-production hub for animation. Post production involves a lot of ink, paint and compositing and scanning work, which is the labor intensive part of the entire process of animation and requires less skill. Thus we can see that the animation industry in India is following a similar evolutionary part as the software industry. In the early part of the evolution of the India software industry, it was the low value jobs which were shifted to India. Over time it is projected that more and more high value jobs would be outsourced to India. For low value post-production works, it is easier for a studio in the US to outsource its post production work as probably nothing is going to go wrong. India has one of the lowest labor rates, which makes it an attractive destination for animation outsourcing.

KEY TRENDS

Indian animation companies are moving up the value chain to own and co-produce intellectual property rights. This is a shift from the model of outsourcing animation production from international studios. The Indian animation companies are also focusing on strategic alliances with overseas studios with the eye to establish a presence in the global animation market. Content creation in the country has peaked and big Indian studios are increasingly making their presence felt in foreign markets. Indian studios are developing rapidly and a trend being witnessed is one of modularization of animation wherein expert from multiple animation companies, come together to execute specific functions in the production value chain. Some work on the design, storyboarding, layouts etc while others focus more on other elements of the process i.e. animation, texturing, lighting etc. These were models which had been perfected previously in mature animation countries such as Korea. This model is being increasingly adopted by Indian animation studios based on the ability of the studios to be process driven enough to distribute the work in modular units without loss of time or quality.

Indian animation companies are garnering larger chunks of the animation outsourcing pie and are also moving up the value chain by co-owning IPR, co-producing animation products for television or home videos or theatrical releases. Given the large domestic demand, India is also likely to evolve into a significant animation consumption country and the demand for local animation content is rising which is exemplified by the tremendous success of the first fully locally produced movies such as Hanuman, and TV shows such as Chhota Bheem etc. Plus there is the tremendous untapped market for merchandising. Popularity of channels such as Cartoon Network, Pogo, Nick etc. has resulted in more opportunities for studios in India. Indian cities such as Mumbai, Hyderabad and Bangalore are offering a state-of-the-art mix of software skills, production and animation expertise and studio infrastructure.

The demand for Indian animation production for export comes mainly from feature film producers and distributors, broadcasting channels, game software producers and advertisement film producers. As of now, Indian animation companies are working with a number of leading foreign studios.

BUSINESS MODELS

Indian Animation studios typically have four prominent business models. They are:

Outsourced animation services

Collaborative animation services

In-house production

OUTSOURCED ANIMATION SERVICES

Most of the Indian animation studios have adopted this business model. This is a low risk low return business model, with the studios doing low value added services such as post production services. In this business model, animation studios work on a time and material basis (payment based on actual expenses) or on a fixed payment basis (fixed fee for the project). Most of the outsourced animation jobs come from studios in the US, Canada and Europe. In this business model, the outsourcing firm has control over the quality of the output and they execute the pre-production and post production part of projects. Thus the labor intensive production works are outsourced. The partnership could be between animation studios in India and abroad, Indian animation studios and foreign TV channels/film producers, Indian animation studios and advertising firms etc. We are also seeing bigger studios in India winning large scale projects and in turn outsourcing some parts of the work to the smaller studios in India to specialist animation studios. Moreover in outsourced animation services, the Intellectual property of the job rests with the outsourcing firm.

COLLABORATIVE ANIMATION SERVICES

In this business model, there is a collaborative effort involving multiple animation studios based in India and abroad. The Intellectual property rights are shared by the firms and so are the revenues arising out of the content. Here firms with different core competencies come together to leverage each other's expertise. The partnership could be between animation studios in India and abroad or between Indian animation studios and foreign TV channels/film producers etc. These revenues could be from selling the content to channels and from royalty from the sale of animation character related products. Firms following this business model are building their capabilities towards producing in-house content.

IN-HOUSE PRODUCTION

In this business model, Indian animation studios create their own content in-house thereby owning the complete intellectual property rights to the content. This is a high risk-high return business model with the animation studio bearing the risk of the entire project. This is evident from the scale of investments required for a full length film (US $ 50-100 million). Most of the Indian players are not in a position to make such large scale investments. In India, more number of large animation studios shifting towards this business model. However no Indian studio has adopted this business model completely. This business model exists along with the previously mentioned models. More and more studios are attaching greater importance to the ownership of intellectual property rights to the content as they can not only generate revenues from content, but they can generate revenues from royalty payments from merchandising. This business model has high barriers to entry and is not easy for the small animation studios to adopt this business model. A number of Indian animation studios have adopted this business model.

Table of Contents

Table of Contents

Introduction

Animation in Asian Societies

Establishment of Local Animation Industry

LOCAL CONTENT PRODUCTIONS

SUCCESSFUL BUSINESS MODELS

Drivers for Success

Models for Animation financing in Asia

Copyright Chain in Asia

Influence of Foreign Animation Styles

POPULARITY OF FOREIGN ANIMATION

Trends in Animation Production in Asia

ANIMATION PRODUCTION IN CHINA

ANIMATION PRODUCTION IN INDIA

ANIMATION PRODUCTION IN SOUTH KOREA

ANIMATION PRODUCTION IN PHILIPPINES

ANIMATION PRODUCTION IN TAIWAN

ANIMATION PRODUCTION IN VIETNAM

Animation Co-Productions in Asia

CO-PRODUCTIONS IN JAPAN

CO-PRODUCTIONS IN CHINA

CO-PRODUCTIONS IN KOREA

CO-PRODUCTIONS IN INDIA

CO-PRODUCTIONS IN TAIWAN

CO-PRODUCTIONS IN PHILIPPINES

CO-PRODUCTIONS IN SINGAPORE

CO-PRODUCTIONS IN MALAYSIA

Collaboration among Asian and Foreign Animation Studios

Controversies Surrounding Foreign Animation

PHILIPPINES

SINGAPORE

KOREA

MALAYSIA

INDONESIA

Animation Studios in Asia

India

Current State of the Industry

KEY TRENDS

CHALLENGES

Business Models of Animation Studios in India

REVENUE MODELS

COST STRUCTURE

TOONZANIMATION INDIA'S IN-HOUSE ANIMATION PROJECT

HANUMAN - INDIA'S FIRST FULLY INDIGENEOUS FEATURE FILM

State of Animation Channels in India

VIWERSHIP PATTERNS OF ANIMATION CHANNELS IN INDIA

ADVERTISING TRENDS IN KIDS CHANNELS

GROWTH IN KIDS ANIMATION CONTENT

MERCHANDISING

EMERGING TRENDS

KEY CHALLENGES

Size of the Indian Animation Industry

RISING DOMESTIC DEMAND

Chhota Bheem: India's successful local animation production

Statistics on Animation Studios in India

The Risks

Future Outlook

Strategies for Animation Studios in India

Animation Schools in India

Key Animation Studios in India

China

Current State of the Industry

KEY TRENDS

CHALLENGES

DEMAND FOR LOCAL CONTENT

GOVERNMENT SUPPORT

MARKET OPPORTUNITY

Chinese Market for TV Animation

CHINESE TV ANIMATION VALUE CHAIN

KEY CHALLENGES IN THE CHINESE MARKET FOR TV ANIMATION

Business Models of Animation Studios in China

REVENUE MODELS

COST STRUCTURE

THRU THE MOEBIUS STRIP - THE FIRST CHINESE 3D ANIMATION MOVIE

Size of the Chinese Animation Industry

Statistics on Animation Studios in China

The Risks

Future Outlook

Strategies for Animation Studios in China

Animation Studios in China

South Korea

Emergence of the Industry

Functioning of Korean Animation Studios

Changing Business Models

GOING BEYOND SUBCONTRACTING

INVESTMENTS BY INDUSTRIAL GROUPS

CHANGES IN INDUSTRY STRUCTURE

SUCCESS IN OTHER COUNTRIES

Current State of the Industry

GOVERNMENT SUPPORT

COLLABORATION WITH OVERSEAS PARTNERS

KEY TRENDS

LOCAL CONTENT

Challenges

Strategies for Korean Animation Studios

OVERSEAS MARKETING

Market Opportunity

SIZE OF THE KOREAN ANIMATION INDUSTRY

Statistics on Animation Studios in Korea

Future Outlook

Animation Schools in Korea

Animation Studios in Korea

Philippines

Current State of the Industry

KEY TRENDS

COMPETITION

INDUSTRY CAPACITY

BRAND BUILDING

GOVERNMENT SUPPORT

DEMAND FOR LOCAL CONTENT

FUNDING

Animation Outsourcing in Philippines

Animated Feature films in Philippines

Industry Recovery

Industry Advantages

Challenges

Animation Education and Training in Philippines

Size of the Philippine Animation Industry

Statistics on Animation Studios in Philippines

Strategies for Philippine Animation Studios

Future Outlook

Animation Studios in Philippines

Taiwan

Past the Turbulent Times

Current State of the Industry

KEY TRENDS

LOCAL CONTENT

COMPETITION

GOVERNMENT SUPPORT

COMPETITIVE ADVANTAGES

Challenges

Threats to Taiwan Animation Studios

INTERNAL THREATS

EXTERNAL THREATS

Animation Schools in Taiwan

Taiwan's first 3D Animated Feature Film

Statistics on Animation Studios in Taiwan

Strategies for Animation Studios in Taiwan

Future Outlook

Animation Studios in Taiwan

Key Animation Studios in Taiwan

Vietnam

Early Foreign Entrants into Vietnam

Key Trends

CAPABILITIES OF VIETNAMESE ANIMATORS

Vietnam's 3D Animated Feature Film

Local animation productions in Vietnam

Challenges

Future Trends

Animation Studios in Vietnam

Statistics on Animation Studios in Vietnam

Strategies for Animation Studios in Vietnam

Future Outlook

Japan

History of Japanese animation

Key Trends

MARKET OVERVIEW

COLLABORATION BETWEEN JAPANESE AND OVERSEAS STUDIOS

OUTSOURCING TO OTHER COUNTRIES

Successful Business Models

Anime Exports

OVERSEAS INFLUENCE OF ANIME

Globally Successful Japanese Animes

THE POKEMON PHENOMENON

Japanese Anime Production Models

PROMINENCE OF 2D

RETAS - SOFTWARE FOR ANIME PRODUCTION

MANGA STUDIO - SOFTWARE FOR MANGA PRODUCTION

Challenges

Future Trends

Statistics on Animation Studios in Japan

Strategies for Japanese Animation Studios

Animation Studios in Japan

Thailand

Key Trends

EARLY PRODUCTIONS

LOCAL CONTENT

Thailand's first 3D Animated Feature Film

Local animation productions in Thailand

Government Support

Industry Drivers

Challenges

Industry Opportunities

Strategies for Animation Studios in Thailand

Animation Studios in Thailand

Statistics on Animation Studios in Thailand

Singapore

Industry Demand Triggers

Local animation productions in Singapore

Singapore Government Initiatives

Industry Drivers

Challenges

Strategies for Animation Studios in Singapore

Statistics on Animation Studios in Singapore

Animation Studios in Singapore

Animation Schools in Singapore

Malaysia

History of Malaysian Animation

Strategies for Malaysian Animation Industry

Government Support

Industry Drivers

Challenges for Malaysian Animation Industry

Industry Opportunities

Strategies for Animation Studios in Malaysia

Malaysia's first 3D Animated Feature film

Statistics for Animation Studios in Malaysia

Animation Studios in Malaysia

Indonesia

Government Support

Indonesia's first 3D animated feature film

Challenges

Statistics on Animation Studios in Indonesia

Animation Studios in Indonesia

Russia

Animation Film market in Russia

Globally successful Russian animations

Industry Drivers

Challenges

Industry Opportunities

Strategies for Animation Studios in Russia

Government support and Animation Funding in Russia

Animation Studios in Russia

Value of Animation Industry in Russia

Size of Animation Industry in Russia

Statistics on Animation Studios in Russia

Israel

Drivers

Israel's first animated feature film

Challenges

Statistics on Animation Studios in Israel

Animation Studios in Israel

Pakistan

History of Pakistani Animation Industry

Current State of the Industry

KEY TRENDS

Pakistan's first 3D animated feature film

Industry Drivers

Challenges

The Risks

Industry Opportunities

Strategies for Animation Industry in Pakistan

Future Trends

Animation Studios in Pakistan

Statistics for Animation Studios in Pakistan

Bangladesh

Current State of the Industry

KEY TRENDS

Bangladesh's globally successful animated short film

Industry Drivers

Challenges

The Risks

Industry Opportunities

Strategies for Animation Industry in Bangladesh

Future Trends

Animation Studios in Bangladesh

FIGURES AND TABLES

TABLE 1: ANIMATION MOVIE CO-PRODUCTIONS

TABLE 2: KEY ANIMATION STUDIOS IN ASIA

FIGURE 1: COUNTRY-WISE COST-QUALITY MATRIX OF ANIMATION IN ASIA

FIGURE 2: COUNTRY-WISE COST OF PRODUCING ONE EPISODE OF ANIMATION IN ASIA